Car insurance is required in almost every state. Only California, Hawaii, and New Jersey have state-run low-income car insurance programs for those who can’t afford coverage.
If you don’t qualify for state-sponsored auto insurance, you must find other ways to get cheaper car insurance rates.
How to Get Cheap Car Insurance with a Low-Income
Since state auto insurance programs are limited, your best bet may be to look for cheap car insurance rates and choose minimum liability coverage.
Remember, each insurance company calculates rates differently, so you must compare quotes from multiple insurance companies to find the cheapest.
How Much Car Insurance Do You Need on a Low-Income?
The good news is that minimum auto insurance coverage may be enough for low-income individuals.
But the minimum coverage varies by state:
- Liability insurance is required in almost every state and covers injuries and property damage you cause in an accident.
- Some states also require uninsured motorist bodily injury coverage and/or personal injury protection (PIP).
- If you have a car loan, your lender will require you to have collision and comprehensive coverage, which protects your vehicle from damages and theft.
States with Government Sponsored Low-Income Car Insurance
If you live in California, New Jersey, Hawaii, or Maryland, you may be eligible for low-income car insurance programs. However, eligibility and coverage options vary by state.
Low-income car insurance in California
California’s low-income automobile insurance program (CLCA) offers low-cost, minimum-liability insurance to low-income drivers.
To qualify, you must have a good driving record, be at least 19 years old, have a valid driver’s license, and meet income-eligible requirements of less than 250% of the federal poverty level (approximately $30,150 for an individual).
The vehicle must also have a market value of $25,000 or less. Auto insurance rates vary by location, and annual premiums have an average cost of between $232 and $932 per year.
Low-income car insurance in New Jersey
New Jersey offers The special automobile insurance policy (SAIP) as the cheapest option for Medicaid recipients. This policy only covers medical expenses for injuries to the driver in a car accident. It does not include comprehensive or collision coverage.
To qualify, you must be enrolled in Medicaid and provide proof of enrollment when applying or renewing the policy. SAIP meets the state’s minimum car insurance requirements and is $365 annually. Available through most state-licensed auto insurance companies in New Jersey.
Low-income car insurance in Hawaii
Hawaii has two programs to help low-income drivers with car insurance: the Aid to Aged, Blind, and Disabled (AABD) program and the Hawaii Joint Underwriting Plan (HJUP). The AABD program helps low-income drivers, the elderly, and those with vision impairments or physical and mental disabilities get vehicle insurance.
The HJUP offers free no-fault car insurance to qualifying low-income drivers who receive public assistance through programs such as Temporary Assistance for Needy Families (TANF) or AABD and those receiving Supplemental Security Income (SSI) from the Social Security Administration.
To enroll, you must get a certificate of eligibility from the Hawaii Department of Human Services, which most state-licensed car insurance companies accept. These policies meet the state’s no-fault auto insurance requirements.
Low-income car insurance in Maryland
Maryland Automobile Insurance (Maryland Auto Insurance) insures low-income families and drivers who cannot get private liability insurance, including those with bad credit or a bad driving record. The fund is a private insurance company regulated by the Maryland Insurance Commissioner.
To qualify, you must have been denied coverage by at least two private insurance companies or have had your insurance canceled or not renewed for reasons other than nonpayment. The fund also covers uninsured motorists and hit-and-run incidents.
The minimum auto insurance requirements are $30,000 per person, $60,000 bodily injury liability per accident, and $15,000 property damage liability.
These are only the specific state-mandated plans for low-income uninsured drivers.
Suppose you don’t live in any of the states above. You may need help with low-income auto insurance programs and discounts.
However, if you do your research, you can find some of the cheapest companies in your area that offer minimum required liability car insurance at affordable rates.
Who Qualifies for Low-Income Car Insurance?
The definition of “Low income” varies by state. In many cases, it’s a percentage of federal poverty levels set nationally and used for Medicaid and other programs. However, each state has its own low-income car insurance guidelines.
For example, only drivers 65 and older who meet additional requirements in Hawaii can qualify for the state’s low-income car insurance program.
Low-income car insurance is an option if you meet the criteria and can’t afford private auto insurance. But it’s not for everyone. Coverage is minimal. State-sponsored programs are barebones in keeping rates low.
For example, California’s CLCA program only provides liability and property damage coverage without comprehensive coverage or collision.
Low-income car insurance helps you meet state requirements and avoid penalties for being uninsured. Still, it may not provide enough financial protection. There are coverage gaps, and you could be on the hook for thousands out of pocket if you get into an at-fault accident.
How much is car insurance for low-income drivers?
The average minimum coverage car insurance rate is around $777 per year or $65 per month. Suppose you don’t qualify for a state low-income car insurance program. In that case, you must buy a standard policy from a private insurer.
Income itself is not a factor in determining auto insurance rates. Still, other factors such as age, location, driving history, coverage levels, and credit score play a significant role.
Two drivers with the same characteristics but different incomes would pay the same rate for auto insurance. However, poor credit scores can indirectly impact costs—a lower income may mean missed debt payments and a lower credit score can mean higher insurance rates.
If you are a low-income driver and:
- Don’t qualify for state-sponsored low-income car insurance.
- Paying more than your state’s average auto insurance rate.
There are ways to lower your car insurance rates, even if you can’t get below-average rates due to driving history, age, or location. Take advantage of car insurance discounts, compare quotes, and adjust your coverage to lower your monthly premium.
Opportunities for low-income drivers to get cheaper car insurance rates
Insurance companies can’t use your income to calculate your car insurance rate. Still, they may consider other factors often linked to income.
Data shows that higher-income people file fewer claims because they can afford to pay for minor damages out of pocket instead of making a claim.
Even if your state doesn’t offer car insurance for low-income people, you can still get cheaper rates by trying these strategies and common discounts listed below.
1. Bundle Your Policies
Many insurers offer discounts for bundling multiple policies like car and home or renters insurance with the same company.
2. Keep a Clean Driving Record
Most big insurers offer discounts for safe driving. Enroll in smartphone-based telematics programs to track your driving habits and get rewarded for not speeding, braking harshly, or being a distracted driver.
3. Consider Pay-Per-Mile Insurance
If you don’t drive much, you might benefit from pay-per-mile insurance. With this type of policy, your premium is based on the number of miles you drive, so a lower mileage means lower insurance costs.
4. Get Discounts
Almost all insurers offer discounts, and most are easy to qualify for. Here are some common ones:
Multi-policy discounts (e.g., car and home/renters insurance).
Multi-car discounts (if you insure more than one vehicle under the same policy).
Good driver discounts for keeping a clean driving record.
5. Compare Quotes
Car Insurance rates vary by company as each company uses a different formula to calculate premiums. Shop around and compare quotes at renewal time to get the best value.
6. Enroll in a Telematics Program
Many insurers offer telematics programs that track your driving habits. By enrolling, you can get an instant 5-10% discount and save up to 40% if you drive safely.
7. Review Your Coverage
If your situation changes, you may pay for coverage you don’t need. For example:
Dropping the rideshare endorsement if you no longer drive for Lyft or Uber.
Removing full coverage if your vehicle is old and paid off.
Talk to your insurance agent to ensure your policy matches your financial situation.
8. Increase Your Deductible
A higher deductible (the amount you pay before your insurance kicks in) can lower your monthly car insurance rate. Just make sure you can afford the deductible in case of an accident.
9. Improve Your Credit Score
It takes time, but improving your credit score can lower your insurance rates. Insurers in most states use credit-based insurance scores to calculate premiums, as data shows that people with lower credit scores file more insurance claims.
Paying bills on time and reducing debt can improve your credit score and lower your insurance cost.
Combining these strategies can increase your chances of finding affordable car insurance rates, even on a limited income.
How Income Affects Car Insurance Rates
Income is not a factor in car insurance rates; several related factors can impact how much you pay. Insurance companies don’t assess your income to see if you qualify for a policy. Instead, when setting premiums, they look at credit history, vehicle type, model year, and ZIP code.
Many of those factors are tied to income levels.
For example, people with lower credit scores—which can result from financial struggles—pay much higher rates. On average, people with bad credit pay 76% more for car insurance than people with good credit, even if they have a clean record.
Neighborhood crime rates can also impact car insurance costs. Lower-income people live in areas with higher crime or theft rates, so insurers charge more because of the higher risk of damage, vandalism, or theft claims.
Are you struggling to afford auto insurance? Insurance Navy can help you save money!
Give Insurance Navy a call at 888-949-6289. We offer free, cheap car insurance quotes online and in person at one of our many locations. We pride ourselves on being the cheapest car insurance company with great coverage!
Low-Income Car Insurance FAQ’s
How Do Low-Income Drivers Get Government Car Insurance?
Only California, Hawaii, and New Jersey have state car insurance programs for low-income drivers. If you live in another state, your best bet is to get quotes from multiple companies for the lowest rate.
Is There Low-Income Car Insurance in Georgia?
Georgia does not have a government car insurance program for low-income drivers. Get quotes from different companies and choose the one that’s best for you.
Which Cars Are Cheapest to Insure?
Older, less expensive, and safety-equipped cars are cheaper to insure. Among used cars, the Chrysler Town & Country, Honda Odyssey, and Subaru Forester are some of the cheapest to insure. The Honda CR-V, Nissan Rogue, and Toyota RAV4 are the most affordable to insure for new cars.
What if I Can’t Afford Car Insurance?
If you can’t afford car insurance, check that your state has a government program. California, New Jersey, Maryland, and Hawaii have programs for low-income drivers. Suppose you don’t qualify for those programs or live in another state. In that case, your best bet is to get quotes from multiple companies to find a policy that fits your budget.
What’s the Lowest Form of Car Insurance?
In most states, the lowest form of car insurance is liability coverage, which pays for damages and injuries to others in an accident. Some states require personal injury protection (PIP) or uninsured motorist coverage. You can add more coverage for extra protection. Still, if you have a financed vehicle, your lender may require more comprehensive coverage to meet loan requirements.
